The United States raids Chinese exchanges! FDIC accuses OKCoin of misleading statements and orders deletion of false claims about fund protection!

U.S. banking regulators late Thursday ordered San Francisco-based crypto exchange OKCoin USA Inc. to remove misleading statements from its website, Coindesk reported. The FDIC sent a letter to the company’s CEO stating that OKCoin must remove false statements suggesting that its customer accounts are protected by the Federal Deposit Insurance Corporation (FDIC) or risk facing enforcement action.

The agency noted that OKCoin is not FDIC insured and does not insure non-deposit products. The banking regulator cited three examples of “false and misleading statements” and warned that only banks, not crypto companies, have FDIC insurance.

Regulators previously issued similar orders to now-bankrupt Voyager Digital and FTX.US .

OKCoin is a sister company of OKX and originated in China.

The U.S. FDIC stated in a letter to OKCoin CEO Hong Fang that the authorities have ordered that any violation statements be immediately removed from its website, otherwise it may face further enforcement actions for violating U.S. banking laws. This is the latest action taken by U.S. regulators after Binance and Coinbase.

“OKCoin is not covered by U.S. FDIC insurance, and we do not provide insurance for non-deposit products,” the U.S. FDIC said in its warning letter. “By not distinguishing between U.S. dollar deposits and cryptoassets, the statement implies that FDIC insurance coverage applies to all customer funds, including cryptoassets.”

The agency cited three examples of “false and misleading statements,” first mentioning on its website that “Provenance Blockchain’s HASH tokens on OKCoin received approval from the U.S. Securities and Exchange Commission (SEC), the U.S. Office of the Comptroller of the Currency (OCC), Extensive regulatory approval from the Federal Reserve (FED) and FDIC.

Secondly, the website also released a promotion in 2020, stating that customer fund accounts on the OKCoin platform have obtained national licenses from FDIC insurance.

Finally, it quoted a company official's Twitter post, which read: "If you are in the United States, we provide FDIC insurance for U.S. dollar deposits."

The U.S. FDIC has previously issued a broader warning to the crypto industry, stating that the authority’s protections focus only on banks, not crypto companies with FDIC-insured bank accounts. These are two very different definitions, but one that seems to be blurred by crypto companies.

In March of this year, OKCoin announced that it had stopped U.S. dollar deposits and over-the-counter trading, which occurred after the liquidation of Silicon Valley Bank (SVB) briefly decoupled the USDC U.S. dollar stablecoin, which caused many cryptocurrency exchanges to suspend their USDC trading pairs. .

At the time, the exchange stated that the suspension of USD recharges was a temporary measure and that the exchange had informed users that it was working to restore services as soon as possible. In addition, deposits via wire transfers and ACH have been disabled, making investors skeptical of the exchange so far.

OKCoin originated in China and was launched in October 2013. In the first three months, it reached a monthly transaction record of 2.6 billion yuan. It is a global Bitcoin trading platform with users from more than 100 countries and is relatively influential. Powerful Bitcoin exchange.

At the beginning of its establishment, the OKCoin Bitcoin trading platform received US$1 million in angel investment from Tim Draper, the founder of Entrepreneurship Workshop and Silicon Valley venture capital.

OKCoin completed a tens of millions of dollars in Series A financing at the end of 2013. Investment institutions include venture capital funds such as Ceyuan Ventures, Manto Capital, and Entrepreneurship Workplace, as well as other angel investors and consultants: angel investor Cai Wensheng, founder of Xiu.com Huang Jin, CSDN founder Jiang Tao, China Youth Angels President Yang Ning, Pre-Angel founder Wang Lijie, Lei Feng founder Lin Jun, etc.

However, as China moves away from Bitcoin and crypto mining, on June 24, 2021, Beijing Lekuda Company, the former operating entity of OKCoin, announced its dissolution.

Following Binance and Coinbase, in addition to OKCoin facing a new round of crackdowns, the New York Attorney General reported on Thursday that Hong Kong exchange CoinEx did not register and falsely claimed to be a crypto exchange, returning $1.1 million to thousands of investors, and Pay a fine of US$600,000. The exchange announced its withdrawal from the U.S. market, initiated the user refund settlement process, and prohibited U.S. customers from registering.